OPEC signals oil supply from rivals proving resilient to low prices

Some Opec members with economies reliant on higher crude prices have become increasingly desperate lately.

It revised its annual forecast for global demand up by 90,000 barrels a day compared to its July report and increased its outlook for production outside OPEC by the same amount.

The return of Iranian oil to the market could make oil even cheaper than the current lows of about $49.50 a barrel. The pullback “might also be related to challenges in keeping exports elevated in an environment where other Opec countries also fight for market share”.

Oil output from the Organisation of the Petroleum Exporting Countries (Opec) surged to its highest in more than three years last month. “U.S. onshore production from unconventional sources is now expected to decline marginally in the second half of 2015 through year-end, while U.S. offshore production is expected to grow due to project start-ups”, OPEC said. The strategy comes as a flood of new oil-including U.S. shale output and new OPEC production-hits at a time when demand forecasts remain cloudy.

The 12-member oil cartel OPEC continues to pump oil at an unrelenting pace.

“The OPEC secretariat is indeed re-evaluating non-OPEC supply’s ability to withstand prices”, said Samuel Ciszuk, senior adviser on security of supply to the Swedish Energy Agency. According to secondary sources cited by the report, OPEC produced 30.51 million bpd in July – 1.5 million bpd more than its 30-million-bpd target.

China consumed 10.9 million barrels a day in June, 490,000 barrels a day higher than the same month a year ago, according to OPEC, but growth in Chinese oil demand is expected to slow somewhat from 360,000 barrels a day this year to 330,000 barrels a day next year.

Opec’s monthly oil market report suggested total output among member countries rose 100,700 barrels per day to 31.5m.

Despite the drop in prices since the last OPEC meeting, officials including Secretary-General Abdullah al-Badri have downplayed the prospect of the group cutting output and said they expect rising demand to support prices. Gulf members, however, have rebuffed calls for an emergency OPEC meeting and show no sign of willingness to consider output cuts.

Crude oil prices have been trading consistently lower because global demand isn’t taking up the surplus in supply.